The only money exchanged by both the long and short at the creation of a futures contract is called the ________.
A) spot price
B) futures price
C) margin
D) collateral

Question

Quizplus · Accepted Answer

The only money exchanged by both the long and short at the creation of a futures contract is known as the margin. It is a partial payment toward the total value of the contract and serves as a form of collateral to the broker or exchange to guarantee the future performance of the trade. The spot price and futures price refer to the current and future prices of the underlying asset, respectively. Collateral may be used in other financial transactions, but is not specific to futures contracts.

The Only Money Exchanged by Both the Long and Short